AB 1072, as amended, Daly. Insurance: firefighters’ or police officers’ benefit and relief associations.
Existing law generally provides for the regulation of insurers by the Department of Insurance pursuant to laws set forth in the Insurance Code. Existing law authorizes the Insurance Commissioner to make certain examinations, investigations, and prosecutions and, upon making a determination of the existence of certain conduct, conditions, or grounds, to issue orders reasonably necessary to correct, eliminate, or remedy the conduct, conditions, or grounds.
Existing law exempts from the requirements set forth in the Insurance Code firemen’s, policemen’s, and peace officers’ benefit and relief associations that comply with specified criteria, including, among other things, a requirement that the membership consist solely of peace officers, members of police or fire departments, and emergency medical personnel employed by fire departments, as specified. Existing law prohibits an association from operating or doing business in the state without a certificate of authority.
This bill would require every association that holds a certificate of authoritybegin insert and that issues long-term disability or long-term care policies or contracts, as specified,end insert to submit to the commissioner the opinion, as specified, of a qualified actuary as to whether the reserves and related actuarial items that support the policies or contracts issued are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and are based on specified actuarial standards and procedures. The bill would also require an association seeking a certificate of authority to file an opinion that meets specified requirements and that establishes that it would have adequate resources to provide benefits, as
specified, as required to satisfy its proposed contractual obligations. The bill would require the commissioner to notify the association of the deficiencies in the filing if the association fails to provide an opinion and supporting memoranda to the commissioner that meets the requirements of the bill, as specified.begin insert The bill would require an association that receives that notice to, commencing 30 days from the notification date, include specified disclosure language in all contracts that are not regulated by the department and in certificates evidencing coverage under those contracts.end insert The bill would also require the commissioner, if he or she determines that the laws governing these associations are inadequate to protect the interests of the members of the associations, to develop and deliver recommendations to the Assembly Committee on Insurance and the Senate Committee on Insurance regarding changes
in the law that would better protect the interests of members of the associations. The provisions of the bill would remain in effect only until December 31, 2018, and as of that datebegin delete areend deletebegin insert would beend insert repealed.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 11401.5 is added to the Insurance Code,
2to read:
(a) (1) Each association that holds a certificate of
4authority pursuant to this chapterbegin insert and that issues long-term
5disability or long-term care policies or contractsend insert shall submit to
6the commissioner the opinion of a qualified actuary as to whether
7the reserves and related actuarial items that support the policies
8or contracts issued pursuant to this chapter, including policies and
P3 1contracts issued by entities established by these associations that
2provide benefits described in this chapter, are based on assumptions
3that satisfy contractual provisions, are consistent with prior reported
4amounts, and are based on actuarial
standards and procedures
5established by the American Academy of Actuaries and the
6Actuarial Standards Board. An association that holds a certificate
7of authority pursuant to this chapter shall file itsbegin delete initialend delete opinion no
8later than July 1, 2016.begin insert The opinion shall have been completed no
9earlier than December 31, 2013.end insert
10(2) An association is considered to have issued a long-term care
11or disability policy or contract if it self-funds all or part of the
12resulting obligation. An association that markets long-term policies
13or contracts issued by an insurer that is admitted by the department
14to offer insurance products in the state is exempt from
this
15reporting requirement.
16(2)
end delete
17begin insert(3)end insert An association seeking a certificate of authority pursuant to
18this chapter shall file an opinion, to the extent feasible, that
19establishes that it would have adequate resources to provide
20benefits described in this chapter as required to satisfy its proposed
21contractual obligations.
22(b) The opinion required by subdivision (a) shall include an
23opinion with supporting memoranda consistent with the same
24qualified actuary as to whether the reserves and related actuarial
25items held in
support of the policies and contracts, when considered
26in light of the assets held by the association with respect to the
27reserves and related actuarial items, including, but not limited to,
28the investment earnings on the assets and the considerations
29anticipated to be received and retained under the policies and
30contracts, and shall make adequate provision for the association’s
31obligations under the policies and contracts, including, but not
32limited to, the benefits under any expenses associated with the
33policies and contracts.
34(c) The opinion required by subdivision (b) shall be governed
35by the following provisions:
36(1) It shall include a memorandum, in form and substance
37consistent with actuarial standards and proceduresbegin delete established byend delete
38begin insert
acceptable toend insert the American Academy of Actuaries and the
39Actuarial Standards Board, in support of the opinion.
P4 1(2) If the association fails to provide an opinion and supporting
2memoranda to the commissioner that meets the requirements of
3this section, the commissioner shall notify the association of the
4deficiencies in the filing, and shall make a specific request that
5identifies the issues that should be addressed in an amended filing.
6(3) (A) An association that receives a notification from the
7commissioner pursuant to paragraph (2) shall not indicate in any
8form of communication that it is operating under the auspices of,
9or was established under, the authority of any provision of this
10
code, the commissioner, or the department, and shall, commencing
1130 days from the date of the notification from the commissioner,
12include the following language in all contracts that are not
13regulated by the department, and in certificates evidencing
14coverage under those contracts, in capital letters and in a minium
15of 12-point type:
17“THE BENEFITS PROVIDED BY THIS CONTRACT ARE NOT
18SUBJECT TO REGULATION BY THE CALIFORNIA
19DEPARTMENT OF INSURANCE, AND THE CONTRACT IS NOT
20GUARANTEED BY THE CALIFORNIA INSURANCE
21GUARANTEE ASSOCIATION.”
23(B) The requirements of this paragraph shall continue until the
24association
satisfies the requirements of this section.
25(d) If the commissioner determines, after a review of the filings
26from the associations, that the laws governing these associations
27are inadequate to protect the interests of the members of the
28associations, he or she shall develop and deliver recommendations
29to the Assembly Committee on Insurance and the Senate
30Committee on Insurance regarding changes in the law that would
31better protect the interests of members of the associations.
32(e) This section shall remain in effect only until December 31,
332018, and as of that date is repealed, unless a later enacted statute,
34that is enacted before December 31, 2018, deletes or extends that
35date.
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